Wednesday, October 22, 2008

What if Steve Forbes Had Won the Election?

To the annals of contra factual history which range from Churchill's "What if Lee had won at Gettysburg", to SNL's what if Napoleon had a B-52 bomber, I have my own addition: What if Steve Forbes had won the primary and general elections in 2000? How would the world differ from the world we live in now?

Steve Forbes would not have negotiated away the supply side tax cuts in 2001. He would not have let the Democrats insist that only tax cuts for the poor and middle class be implanted immediately. He would not have agreed to defer the tax cuts of the entrepreneurial and investor class into the indefinite future. He would have (and did) recognize that we had already entered a recession before he entered the White House and would have used that fact to push the tax cuts through. The Forbes Boom would have started in 2001, not 2003. Two years of stagnation and jobs loss could have been avoided.

There would not have been a flood of excess money supply in 2003 either. The tax cuts would have made that kind of hyper stimulation through the printing press unthinkable. Even if Greenspan would have been tempted to flood the globe with dollars, Forbes would have put rhetorical (which is perfectly legitimate; the Fed is independent, but not quarantined) pressure on them to do the right thing. No cash flood means no housing bubble.

It also means no collapsing dollar, and no oil price bubble, which means no recession now.

Steve Forbes would not have signed Sarbanes Oxley. He would have rightly pointed out that Enron was a beneficiary of overregulation of financial and energy markets; that Enron gamed the regulator system to their advantage. Forbes would have vetoed Sarbox. His SEC would have jailed the Arthur Andersen partners directly responsible for the fraud, but not destroyed the global 85,000 person firm. With no Sarbox and no Enron overreaction, we would not have foisted any 'mark to market' nonsense onto financial statement preparers. The short sellers would be allowed to operate, but they would not have been allowed to write the rule book. Lehman would not have failed. The modest downturn in housing related securities (with no Fed money gusher to fill a big bubble) would have been ridden out by the vast majority of banks as had happened in the 1980s.

Steve Forbes would not have concluded that Wall Street had "gotten drunk." He would have concluded that the regulators and central bankers had slipped them a Mickey. And if they had gotten drunk, he would have prescribed AA, not prohibition. Forbes would not have waited until his sixth year to veto corrupt spending. He would not have waited until his 7th year to issue an executive order forbidding earmarks. He would have saved the Republican congress from itself.

The boom would be continuing. His chosen successor would be leading in the polls. The Dow would be rising. Unemployment would be dropping. The US would be spreading prosperity to the world right now, not financial chaos.

34 comments:

Stevy F was recomending Ford at the top a year ago. Ford may be in pink sheets soon. Boyer your nothing more than a fiction writer. Sarbox was needed just for you fiction writers. Lack of transparity is what fiction is based on. The bust is based on 40 to 1 leverage not a golden spoon feed geek. Wow what a joke. Don't blame poor and middle class for your loses.

What if Al Gore had won? No Iraq war, so no loss of billions and billions of taxpayer dollars, not to mention the lives of the 4000 soldiers we've lost. No sweet no-bid deals with Halliburton. Everyone but Cheney would be better off.

And for a little more contra-factualism, how about what if Steve Forbes was the only politician in the history of mankind to adhere perfectly to his dogma and not be swayed by political expediency even once. Oh, right, that's what you just said. Sorry.

omg, this guy has been so consistently wrong I cannot take any of this as serious. He seems to reside in an ideologically constructed world of free market dogma and a warped evangelical world view. Just go back to cnbc and look through his video archives to see how wrong this guy has been.

Seriously, I think he's being sarcastic. Can you say "hyperbole"? And since Steve Forbes is President, and none of us common folk can afford a dictionary any more, I'll 'splain it to you: hyperbole is a figure of speech in which exaggeration is used for emphasis or effect, as in "I could eat a horse", or "economic anarchy is sound policy".

Forbes would've followed suit with the rest of the republican lackeys after 9-11 and blasted away our economy with undo and unnecessary war profiteering to bolster what economy we would've had left. Oops, isnt' that what Bush did? Yep! Though at least filing taxes would be easier with his flat rate.

It's not a threat, it's a fact. Isn't this our only choice? A question alien to the philosophical universe most inhabit.

Either man takes the raw materials of the earth and transforms them into the requirements of his life, or he dies. Pretty simple, right? There is no escaping this fact, not if we want to live, yet, why are so few able to fully embrace it?

Capitalism is the only moral political/economic system, we ignore this at our peril.

This is a joke, right? The current economic state is a byproduct of the failures and excesses of capitalism, and we'd probably be headed into Great Depression 2: Electric Boogaloo if our friend Steve "Silent Cal" Forbes had been elected.

Anyone who thinks this crisis is the result of capitalist excesses or deregulation simply has no idea what they're talking about. Point me to one piece of deregulation enacted over the last 8 years. Go ahead, I'll wait.

Meanwhile, everyone else seems to be confusing anger for argument. If you have an argument, make it. If not, what on earth are you babbling on for?

cuz 911 never happens. steve forbes is jesus! and wall street doesn't put a gun to taxpayers' heads to bail their greedy cheating asses out. Steve Forbes is to George Bush as Apollo 13 is to Operation Iraqi Freedom.

Mr. F. - The point many of us, economists including most "right wing" types (and now even Greenspan), have been making is that there may be enough 'regulations' on the docket to have averted much of the 'crisis'...the problem of the last 8 years has been a failure of enforcement. Since you want an example - read/listen to the Cox-Paulson exchange at the SEC 2004 meeting when Cox was meeting with the bankers including Paulson as head of GS (if you don't have that reference - google it or follow the links from any of the article - Economist, Time, Newsweek - whatever you read...it's been covered enough). Then note the aftermath of the 'agreement' - absolutely not one attempt to regulate.

Mr. Bowyer - As for what's to 'blame' - read the Greenspan testimony. If there was no market for CDS there would have been far fewer middle-class liar loans made. About time amateur supply-side economists learnt something...its demand that drives supply. Supply drives price. Go back to school.

And what if Humpty Dumpty had had wings, so he didn't have a great fall and he could have flown away, so instead of the king's horses and the king's men trying to re-assemble him they could have joined the coalition of the willing in Iraq so that we would have been welcomed as liberators and been given lots of cake on our victorious walk through Baghdad... Yeah, the idea of Steve Forbes having been elected president is a lot like that. Don't you think it's time to get a life instead of living life like the Harry Turtledove books my son read when he was younger?

Jerry Bowyer should watch the tapes of Kudlow whose show he has appeared on numerous times. Jerry was an eternal optimist for years even though the signs of economic problems ahead were pointed out by many people he chose to chastise. In fact, if you had followed Jerry's prediction of higher stock prices and no recession over the last few years you would be a lot worse off than if you had listened to more competent people. So, Jerry, how are you able to explain what happened now when you appeared ignorant of the problems before?

How true. We need someone with financial sense in charge. Not just another lawyer or political science major. Forbes or Romney represent the only candidates to run for president that actually know how to grow the economy and growing business, NOT the government.

Jerry -- Good to see you have not changed your ideology since leaving WPTT in Pittsburgh. The policies that you assume would have taken place under a "President Forbes" sound pretty good. My only question is: Would Forbes have invaded Iraq? If your answer is yes, then all the other policies under a Forbes administration would meaningless!

"Then note the aftermath of the 'agreement' - absolutely not one attempt to regulate."

Regulate what? Specifics, please. You say regulations were not being inforced, which still leaves you to a) explain which regulations those were and b) why their non-enforcement was responsible for the crisis.

Right, because the hard part was getting people to want to travel safely and quickly, NOT building the internal combustion engine. Sure.

Economics are complicated, no doubt, but the fundamental driver of economic growth is innovation and technology. Saying otherwise doesn't even pass a basic logic test. Henry Ford once put it best: "If I asked my customers what they wanted, they'd have told me they wanted faster horses."

"In fact, if you had followed Jerry's prediction of higher stock prices and no recession over the last few years you would be a lot worse off than if you had listened to more competent people."

That's not what I've seen. I see him predicting the market would rebound, which it did -- all the way up to 14,000. You could have made a great deal of money on that. No one predicted that the market would rebound and never, ever go down again. This criticism is horrendously simplistic.

"Iknew the guy was out of his mind, but really this is kind of sad. And why would intrade post the ramblings of an insane man?"

I wondered the same thing while reading this comment. And numerous others here, sadly.

"Maybe next you can give us an alternate history of what would have happened if Alan Keyes had won? Pat Buchanon? Maybe Lyndon Larouche?"

We're in an economic crisis, so the article is about what a President with financial expertise might have done differently. I'd have thought this was obvious, but apparently not.

The ratio of substance-to-dreck in the comments here is downright depressing.

I wrote:"In fact, if you had followed Jerry's prediction of higher stock prices and no recession over the last few years you would be a lot worse off than if you had listened to more competent people."

Mr F wrote: "That's not what I've seen. I see him predicting the market would rebound, which it did -- all the way up to 14,000. You could have made a great deal of money on that. No one predicted that the market would rebound and never, ever go down again. This criticism is horrendously simplistic."

Mr F, anyone who takes investment advice knows that buy recommendations are useless without adequate sell recommendations. Plenty of people talked the market up to 14000 but how many of them told you to sell? Robert Prechter is about the only person I know who has correctly called this deflationary asset bubble. Bowyer rode the coat tails of optimism building the bubble and like many others who practice gratuitous self promotion have been proven full of nonsense.

The candy that made bankers diabedics is when Dumya(W) allow $40 to $1 leverage. 2004 when Dumya had "his mandate" he got this crap done. 2 1/2 cents for 1$. That was regulaton Dumya style. So now we have Dumya economics not that Exhalt style of capitalism. (i feel ya exhalt) Mr F, Dumya maken us solcialist now and screwed our markets. Bail-in his lackys. SIMPLE and easy to profit as shorting Boyers 'what ressision". I thank him.... New short tip boys NWS!